These are ventures which require heavy initial outlay and are long life in nature. It is building or acquiring an asset which leads to a firm growth in future. Their decisions involve committing large sums of money which the firm many not raise from their retained earnings. Project investment capital is top level management responsibility.
There are several sources of funds available to a firm and they include banks, equity investors through issue of shares, financial institutions, angel investors, gentlemen in dark glasses, shy locks and venture capital. Capital investment is not only meant for resources or long term asset but they can also be used for purposes of working capital.
Public asset investment projects include construction of railways, roads and dams to benefit the society and to improve infrastructure to encourage more investors to invest in a country. Strategic level of management is tasked with the role of evaluating a capital investment project and making decisions on whether to commit the firms fund on the project or not.
There exist many methods which facilitate choosing of right and appropriate investment or project to invest in. Many companies will stress for projects with prompt returns, this is actually the kind of projects the managers will go for, but this does not mean it is the shareholders goal.
Making strategic venture decision consistent with the organization goal is an issue as some shareholders prefer using appraisal techniques which raises the opportunity for their projects to be selected. Another challenge in investment projects is ill structuring which will result to use of approaches that have never been used before thus resulting to complexity, irreversibility, novelty and ambiguity.
There are many asset investment projects and include investment in new markets or products. New asset venture is necessary for the expansion and growth of the company. A company growth is also very important to the economy as it results to more jobs being created and also more revenue to the government.
Before a firm commits it hard earned money in any project, it should first carry out investment appraisal. The appraisal of projects has two distinct features that is evaluating the amount of return expected from the expenditure made and estimation of additional future benefits and cost over the entire project useful life.
The expansion of market and existing product results to growth of the firm. This venture requires thorough financial analysis. Another capital venture is replacement project, this decision are usually common in manufacturing companies where they have to replace an old manufacturing plant.
To evaluate the viability of the new machine a firm uses the projected cash flow from the new machine, they are discounted to get their net present value the resultant present value is compared against the present value of old machinery, if the present value of new machinery is bigger than the present value of old asset then the firm can go ahead to commit their funds.
There are several sources of funds available to a firm and they include banks, equity investors through issue of shares, financial institutions, angel investors, gentlemen in dark glasses, shy locks and venture capital. Capital investment is not only meant for resources or long term asset but they can also be used for purposes of working capital.
Public asset investment projects include construction of railways, roads and dams to benefit the society and to improve infrastructure to encourage more investors to invest in a country. Strategic level of management is tasked with the role of evaluating a capital investment project and making decisions on whether to commit the firms fund on the project or not.
There exist many methods which facilitate choosing of right and appropriate investment or project to invest in. Many companies will stress for projects with prompt returns, this is actually the kind of projects the managers will go for, but this does not mean it is the shareholders goal.
Making strategic venture decision consistent with the organization goal is an issue as some shareholders prefer using appraisal techniques which raises the opportunity for their projects to be selected. Another challenge in investment projects is ill structuring which will result to use of approaches that have never been used before thus resulting to complexity, irreversibility, novelty and ambiguity.
There are many asset investment projects and include investment in new markets or products. New asset venture is necessary for the expansion and growth of the company. A company growth is also very important to the economy as it results to more jobs being created and also more revenue to the government.
Before a firm commits it hard earned money in any project, it should first carry out investment appraisal. The appraisal of projects has two distinct features that is evaluating the amount of return expected from the expenditure made and estimation of additional future benefits and cost over the entire project useful life.
The expansion of market and existing product results to growth of the firm. This venture requires thorough financial analysis. Another capital venture is replacement project, this decision are usually common in manufacturing companies where they have to replace an old manufacturing plant.
To evaluate the viability of the new machine a firm uses the projected cash flow from the new machine, they are discounted to get their net present value the resultant present value is compared against the present value of old machinery, if the present value of new machinery is bigger than the present value of old asset then the firm can go ahead to commit their funds.
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